At Corporate Funding, our professionals understand contract financing, franchise financing and merchant cash advances. There are many options that can help your business grow, expand and become a cornerstone in your community. We are prepared to help you based on your needs, not put you into a box based on our ideas of what you need.
When your business needs a boost of working capital, you want to find a business loan that fits into your business. At Corporate Funding, we have a large portfolio of commercial finance products to give you options above and beyond a traditional loan. We are a leader in the business finance industry. Our financial professionals have worked with small, medium and large businesses to find business loans that fit their needs. Let us help your business take the next step toward success.
Corporate finance is an area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase shareholder value. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.
The terms corporate finance and corporate financier are also associated with investment banking The typical role of an investment bank is to evaluate the company’s financial needs and raise the appropriate type of capital that best fits those needs. Thus, the terms “corporate finance” and “corporate financier” may be associated with transactions in which capital is raised in order to create, develop, grow or acquire businesses. Recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions
What is corporate Funding?
Corporate Funding is a low-cost alternative to debt or equity for financing your business.
Traditionally, Corporations raise capital either through equity or debt. Corporate Funding is the use of tax incentives, grants and zero/low interest loans to significantly lower your cost of capital. Tax incentives and grants are non-refundable cash injections. That means that they sink straight down to your bottom line. Zero-interest loans are the cheapest form of debt, typically unsecured with an upfront grace period. In fact, in real terms, you end up paying back less than you borrowed. There is no better form of debt. That’s why our by-line is “Add points to your bottom line. Guaranteed” Corporate Funding will do that. So it makes sense to develop a funding strategy.
The 3 Important Activities that Corporate Finance
1 Investments & Capital Budgeting
Investing and capital budgeting includes planning where to place the company’s long-term capital assets in order to generate the highest risk-adjusted returns. This mainly consists of deciding whether or not to pursue an investment opportunity through extensive financial analysis.
By using financial accounting tools, a company identifies capital expenditure, estimates cash flows from the proposed capital projects, compares planned investments with projected income, and decides which projects to include in the capital budget.
Financial modeling is used to estimate the economic impact of an investment opportunity and compare alternative projects. An analyst with often use Internal Rate of Return (IRR) in conjunction with Net Present Value (NPV) to compare projects and pick the optimal one.
2 Capital Financing
This core activity includes decisions on how to optimally finance the capital investments (discussed above) through the business’ Equity, Debt, or a mix of both. Long-term funding for major capital expenditures or investments may be obtained from selling company stocks or issuing debt securities in the market through investment banks.
Balancing the two sources (equity and debt) should be closely managed because having too much debt may increase the risk of default in repayment, while depending too heavily on equity may dilute earnings and value for original investors.
Ultimately, it’s the job of corporate finance professionals to optimize the company’s capital structure by lowering its Weighted Average Cost of Capital (WACC) to be as low as possible.
3 Dividends & Return of Capital
This activity requires corporate managers to decide whether to retain a business’s excess earnings for future investments and operational requirements or to distribute the earnings to shareholders in the form of dividends or share buybacks.
Retained earnings that are not distributed back to shareholders may be used to fund a business’s expansion. This can often be the best source of funds, without incurring additional debts or diluting the value of equity by issuing more shares.
At the end of the day, if corporate managers believe they can earn a rate of return on a capital investment that’s greater than the company’s cost of capital, they should pursue it otherwise; they should return that capital to shareholders via dividends or share buybacks.